What Is a Qualified Personal Residence Trust?

If you are exposed to the federal estate tax, a qualified personal residence trust can be a useful tax efficiency tool. Most people are not faced with estate tax exposure, because the credit or exclusion is relatively high. For the rest of 2014, this exclusion sits at $5.34 million. In 2015, it increases to $5.43 million. You can leave unlimited assets to your spouse free of taxation, but the estate tax would be a factor on transfers to other people if the transfers exceed the estate tax exclusion. The estate tax currently carries a top rate of 40 percent, so you should be proactive about the implementation of estate tax efficiency strategies if your estate is in taxable territory. In addition to the federal estate tax, there is also a federal gift tax.  Together they are referred to as transfer taxes. The transfer tax exclusion is a unified exclusion. It encompasses taxable gifts that you give while you are living along with the value of your estate. Qualified Personal Residence


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